Benzinga - Former cryptocurrency magnate Sam Bankman-Fried has initiated legal action against his insurer Continental Casualty Company (CNA), accusing them of not covering his legal expenses tied to his fraud defense.
As Bankman-Fried appeared in court Tuesday, denying any fraudulent activities, the lawsuit against CNA highlights his involvement in multiple legal and regulatory proceedings due to the downfall of his crypto platform, FTX (CRYPTO: FTT).
This scenario brings to mind the upcoming discussions at Benzinga's Future of Digital Assets conference on Nov. 14, emphasizing the intricate relationship between digital assets and legal implications.
The lawsuit, filed on Oct.2, in the District Court of Northern California, indicates that CNA has "wrongfully refrained from promptly settling Mr. Bankman-Fried’s claims as stipulated in the Policy."
The paperwork further emphasizes the potential significant and lasting damage to Bankman-Fried, for which legal remedies might be insufficient.
The insurance policy with CNA offers coverage up to $5 million, which becomes applicable once a primary policy of $10 million is used up.
This lawsuit underscores the escalating legal expenses Bankman-Fried has been incurring since the bankruptcy declaration of FTX in late 2022.
Benzinga has reached out to CNA for a comment on the lawsuit.
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Following his apprehension in December 2022, Bankman-Fried was provisionally set free on a bail bond of $250 million.
It later emerged that this bond had the backing of his family and a couple of acquaintances affiliated with Stanford University.
Earlier this year, in a Substack entry, Bankman-Fried indicated his openness to part with Robinhood (NASDAQ: HOOD) shares valued at approximately $500 million.
This was in exchange for access to FTX's D&O insurance coverage for top-tier executives.
However, these assets are now under the control of the Department of Justice.
The legal proceedings against Bankman-Fried for alleged fraud commenced Tuesday in a Manhattan legal facility, initiating the jury selection process.
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